Vivek Menon at Danfoss: Building a Teal Bubble in a Large Company

A Teal organisation is one that moves beyond Orange (a hierarchical organisation) and Green (where there is some level of empowerment) to fully self-managing organisations. It was promoted by Frederick Laloux in Reinventing Organisations.

"It works if you can deliver on the KPIs," explains Vivek. The eSteering division ("the Tesla of off-road vehicles") beat every target they set, including in Corona times, and achieved 24% CAGR (Compound Annual Growth Rate) — almost tripling profit in five years.

One key element was to split leadership between functional leadership and people roles. On the people side, they have 'sparring partners' and people nominate themselves to play this role.

They now have 13 sparring partners, where previously they had 5 managers. It might be somebody with specialist knowledge, sometimes quite young, who you go to for sparring on those topics.

"Self-organising is not about no leadership, it is about more leadership. About everybody stepping up to take more leadership."

Key is to decentralise the power traditionally held by the Project Manager. Based on Holocracy, the team created 'lead links' at a lower level but with full accountability.

"My leadership style is now based on influencing, not on telling people what to do. The team decides who has accountability — not me. You need to fall in love with the result not the way, and be ready to keep adjusting.

"Start with yourself. You may have learnt leadership in a traditional way. You need to change to more of an influential, coaching facilitative style, for your personal journey of transformation.

"Instead of traditional performance management we train people to give and receive feedback. The people who best know somebody’s performance is their peers, much clearer than the manager. In round 1 and round 2 of providing feedback people did find it difficult but by round 5 they felt comfortable.

"It's about taking self-ownership. Each person decides what they take as actions, they are responsible for their development. 3 months or 6 months later, they are giving the report on their responsibility. Not the manager.

"To get real ownership you start with trust and transparency. Financial transparency is crucial. Every month we hold a town hall meeting on how the business is doing. We want to get the engineers to understand their role in the overall P&L. We want them to see where they have spent and where things have been delayed, so they can get creative. We want people to run it like they were running their own business."

On hiring the whole team is involved, rather than just the people manager. This especially helps teams to integrate the newcomer better. On meetings they avoid the HIPPO (Highest Paid Person's Opinion) syndrome and use circle time, where everybody speaks once in each circle. On conflict management everybody is trained in conflict resolution so there is no need to move it up to a manager.

There are some challenges for people from the larger organisation. "They will say 'I want to talk to a Director of the team'. And we will say, we will give you the person with the accountability for that project.

"One of our young engineers went to a group meeting for digital customer feedback. Everybody else was a director, he had just been there two years. I explained, 'Yes, but you actually know much more than many of them. They may be 25 years in the company but they are not digital. You are digital first.'"

As well as the strong financial performance, the eSteering team does well on employee engagement, which is measured across Danfoss. The employee NPS ('how likely would you be to recommend this department to a colleague') is 30 pts higher than the division.

"Too many leaders get dragged into operational decisions. Here we have clear goals and clear accountability so I can free up my time as a leader to think longer term. I get to do what I think I want to do, but that most leaders cannot do."

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